Some large investors, such as Black Rock and PIMCO, issued statements to say they would become partners.
“This is perhaps the first win-win-win policy to be put on the table, and it should be welcomed enthusiastically,” said Bill Gross, PIMCO’s chief investment officer, in an interview with Reuters. “We intend to participate and do our part to serve clients as well as promote economic recovery.”
Some private economists also said the plan could work.
Bad assets of $1 trillion?
The Federal Reserve is now putting the banks through “stress tests” to determine how much additional capital they might need if the economy worsens. Bank analysts expect that the Fed, in the course of these examinations, will also get a better idea of the amount of bad loans in the banks’ portfolios. Mr. Zandi estimates the bad loans are now as much as $1 trillion.